September 12, 2024
Top 10 Stock Fast Retailing Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Fast Retailing – Top 10 Stock in Nikkei 225 Index
Fast Retailing is listed as a top 10 stock on September 12, 2024 in the market index Nikkei 225 because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 65 (high 65% performer), Obermatt assesses an overall buy recommendation for Fast Retailing on September 12, 2024.
Snapshot: Obermatt Ranks
| Country | Japan |
| Industry | Apparel Retail |
| Index | TOPIX 100, Nikkei 225 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Fast Retailing Buy
| 360 METRICS | September 12, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 1 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 69 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 65 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 91 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 65 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 65 (better than 65% compared with alternatives), overall professional sentiment and financial characteristics for the stock Fast Retailing are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Fast Retailing. The consolidated Growth Rank has a good rank of 69, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. This means that growth is higher than for 69% of competitors in the same industry. The consolidated Safety Rank at 65 means that the company has a financing structure that is safer than 65% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 91, which means that professional investors are more optimistic about the stock than for 91% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 1, meaning that the share price of Fast Retailing is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 99% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 65, Fast Retailing is better positioned than 65% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 69), a safe financing structure (Safety Rank of 65), and positive professional market sentiment (Sentiment Rank of 91), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Fast Retailing compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (69% better than peers). The value rank could be the reverse reflection of that (31%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Fast Retailing very positive
ANALYSIS: With an Obermatt Sentiment Rank of 91 (better than 91% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Fast Retailing is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Fast Retailing. Analyst Opinions are at a rank of 49 (worse than 51% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 66, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Fast Retailing. Even better, the Professional Investors rank is 100, meaning that professional investors hold more stock in this company than in 100% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 64, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 64% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 91 (more positive than 91% compared with investment alternatives), Fast Retailing has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Fast Retailing Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 1 (worse than 99% compared with alternatives), Fast Retailing shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Fast Retailing. Price-to-Sales is 5 which means that the stock price compared with what market professionals expect for future profits is higher than 95% of comparable companies, indicating a low value concerning Fast Retailing's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 12, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Fast Retailing. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 5 and Dividend Yield, which is lower than 84% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 1, is a sell recommendation based on Fast Retailing's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Fast Retailing? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Fast Retailing? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Fast Retailing may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Fast Retailing Growth Momentum good
| GROWTH METRICS | September 12, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 84 |
|
||||||
| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 59 |
|
||||||
| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 18 |
|
||||||
| STOCK RETURNS | ||||||||
| STOCK RETURNS | 69 |
|
||||||
| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 69 |
|
||||||
ANALYSIS: With an Obermatt Growth Rank of 69 (better than 69% compared with alternatives), Fast Retailing shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Fast Retailing. Sales Growth has a rank of 84 which means that currently, professionals expect the company to grow more than 84% of its competitors. Both Profit Growth, with a rank of 59, and Stock Returns, with a rank of 69, are also above average. But Capital Growth only has a rank of 18, which means that, currently, professionals expect the company to grow its invested capital less than 82% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 69, is a buy recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: Fast Retailing Debt Financing Safety above-average
| SAFETY METRICS | September 12, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 54 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 56 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 64 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 65 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), the company Fast Retailing has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Fast Retailing is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Fast Retailing. Leverage is at 54, meaning the company has a below-average debt-to-equity ratio. It has less debt than 54% of its competitors. Refinancing is at a rank of 56, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 56% of its competitors. Finally, Liquidity is also good at a rank of 64, which means that the company generates more profit to service its debt than 64% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 65 (better than 65% compared with alternatives), Fast Retailing has a financing structure that is safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Fast Retailing Below-Average Financial Performance
| COMBINED PERFORMANCE | September 12, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 1 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 69 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 64 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 39 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 39 (worse than 61% compared with investment alternatives), Fast Retailing (Apparel Retail, Japan) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Fast Retailing are low in value (priced high) with a consolidated Value Rank of 1 (worse than 99% of alternatives). But they show above-average growth (Growth Rank of 69) and are safely financed (Safety Rank of 65, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 39, is a hold recommendation based on Fast Retailing's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Fast Retailing exhibits low value (Obermatt Value Rank of 1), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 69). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 65) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.